E-commerce Tools & Best Practices

In a Perfect World, What Should the Average Rate of Purchase Returns Be?

By: LeeMarie Kennedy | May 18, 2020

Shippo Snippets:

  • Purchase returns have become part of the e-commerce industry’s daily cost of doing business
  • Enhancing the overall customer experience with a well-mapped customer journey can provide immense value to the bottom line and minimize the need for returns in the first place 
  • During these challenging COVID-19 times, providing much-needed stability through thoughtful customer service and simplified returns can make or break a concerned consumer’s experience
  • The best way to look at it is as a balance—between permitting enough leeway to instill confidence in making a purchase, with a policy that screens appropriately for fraud and monitors for profit loss

The Story: 

Purchase returns have steadily become a staple in the standard e-commerce customer experience. In many cases, they’re the unavoidable cost of doing business online. But especially during these challenging COVID-19 times, providing much-needed stability through thoughtful customer service and simplified returns can make or break a concerned consumer’s experience. 

When executed well, e-commerce returns can increase customer loyalty and drive future sales. But when the returns management process gets glitchy, that same customer can click over to a competitor who makes returns easier and even free. 

As for the average rate of returns, on National Return Day 2020 this past January 2, nearly two million e-commerce shoppers made purchase returns to online retailers, almost 26% more than the year before. And that number continues to rise. 

What about a “perfect” world, where the likelihood of a purchase return decreases before the customer even checks out? In this piece we’ll explore how a well-crafted customer journey with critical product information and personalized touchpoints can diminish the rate of e-commerce purchase returns and save a whole lot of energy on reverse logistics.  

Retail Returns Keep Climbing

Purchase returns are so central to the customer experience, that some companies have increased warehouse space, and added new workers and departments just to accommodate returns management. 

The financial implications are steadily rising as well. In 2018, total merchandise returns accounted for nearly $369 billion in lost sales for U.S. retailers, and it is estimated that there will be $550 billion in return delivery costs incurred by the end of this year.

Not surprisingly, 93% of e-commerce consumers say a free return policy is an important factor when they’re making a purchase. 

Here are a few examples of how online consumers can take advantage of the evolving returns experience from the comfort of their own home: 

Serial Returners 

Many shoppers purchase orders with the preconceived notion of returning some or all of the items. Forty-one-percent are “bracketing,” or buying multiple versions of an item, trying them on at home, and returning what they don’t like. These serial returners can take advantage of overly lenient return policies and use them to engage in return fraud or abuse, which represents 6.5% of total returns and costs nearly $23 billion annually. 

Trending: Try-Before-You-Buy 

Regardless of the rising costs, some online retailers accommodate these “bracketers” by offering them try-before-you-buy programs. 

Warby Parker’s “Home Try-On” option lets shoppers test five eyeglass frames for five days for free. With their most recent valuation at $1.75 billion, it appears to be working. 

And the line isn’t even being drawn at undergarments. Luxury lingerie retailer La Perla offers a “try and buy” option where customers can receive products at no cost, take 48 hours to try them on at home, and either pay for what they keep or arrange a free return. The company believes it’s the best way to bridge the gap between consumers and the restrictive price points upwards of $250 for many items. 

Categories most frequently returned:

  • Apparel: 43%
  • Miscellaneous: 22%
  • Consumer Electronics: 12%
  • Home Decor and related products: 12%
  • Footwear: 11%

The Value in Prioritizing a Stellar Customer Experience

These days, an exceptional customer experience (CX) isn’t something shoppers think of as a perk. It’s an expectation. In fact, 84% of consumers feel the customer experience is just as important as the product or service itself, with 69% purchasing more from brands that offer a consistent customer experience.

In a decade-long study to uncover what customer experience is really worth, Watermark Consulting found CX leaders generate 3x greater stock-market returns than CX laggards. Which begs the question—what do CX leaders do differently? We’ll get into that next. 

By creating a dynamic and immersive customer experience that keeps consumers clicking, informed, and able to thoughtfully make a purchase, CX leaders can capitalize on more than just their product or service. All told, a whopping $98 billion is being left on the table by brands who fail to offer simpler experiences and communications to their customers. That’s a lot of money lost on a lack of attention to detail. 

Enhancing the Customer Journey to Help Minimize E-Commerce Returns

A simplified and clear customer journey can make all the difference between online shoppers knowing what they’re paying for and missing the mark on their expectations entirely. In doing so, e-commerce companies can get ahead of returns long before checkout. 

Here are a few ways to supercharge the customer experience and avoid unnecessary purchase returns: 

Create a Customer Journey Map 

A customer journey map is a visual representation of the process a customer goes through to interface with your business. You can use a customer journey map to get a sense of each customer’s unique motivations and pain points and assess what’s drawing them into your business and what’s pushing them away.

To begin creating a customer journey map, list out all the ways your customers can come interact with your company online: 

  • Website
  • Social media channels
  • Email marketing campaigns
  • Third-party review sites or mentions 
  • Paid advertisements

Next, list out all the emotions, actions and obstacles that might present themselves along the way: 

  • What is their action at this point in the journey? 
  • Are they being asked to do too many things to interact with your brand?
  • What are they thinking or feeling?
  • Are there obstacles in their way? 

The emotional drivers behind each customer action is typically caused by a problem or pain point. By mapping this journey out, e-commerce retailers can deliver the right content at the right time to ease their emotions while they shop and alleviate purchasing anxiety. 

Detailed Product Information 

Combing through current product listings to ensure high-quality photos, videos and detailed product descriptions can be time well spent to decrease purchase returns. At least four high-resolution photos, one from every angle (front, back, both sides) should showcase what a product really has to offer. And being meticulous about highlighting product dimensions, weight, and materials also arms the customer with important pre-purchase information they can use to manage more realistic expectations. 

A Clear and Visible Return Policy 

Thirty-three percent of online shoppers would forego making a purchase if they were unable to locate the exchanges and returns policy on a company’s website. By making it easy for them to understand the fine print, many online shoppers will be deterred from serial returning behaviors and engage more responsibly with your brand. 

Size Guides and Fitting Tools

Size guides and fitting tools can range from a sliding scale of how an item fits the average customer (i.e. “as expected,” “smaller than expected,” or “larger than expected”) to virtual dressing rooms that use webcams and software tools to tailor the item directly to the shopper. Since the top two reasons for online returns are items being a size too small (30%) and a size too large (20%),  these guides can be a great way to avoid unnecessary returns from sizing woes. 

An Amped-Up FAQ Page

Detailed FAQs can go a long way in lifting up the overall customer experience. Not only do they expose some of the common pain points that come up in the customer journey, but they can also free up time for the customer support team, build trust between the merchant and the customer, and increase the likelihood of them making a well-informed purchase they’re proud to keep. Bonus: high-value content on an FAQ page can improve organic search visibility. An effective FAQ page:

  • Reflects your audience’s motivations, emotions and needs 
  • Covers transactional, informational and locational intent 
  • Solves problems before they arise
  • Is updated frequently based on new insights and data 
  • Drives internal pageviews 
  • Fuels content creation 
  • Showcases the seller’s trustworthiness and expertise 

Examples of well-crafted FAQ pages: 

  • Nixon watch and apparel company has a general FAQ page featuring their most common questions in addition to individual product FAQ pages that address specific questions without overloading the main FAQ page 
  • Ipsy is a subscription-based cosmetics service that offers five deluxe samples of everything from skincare products to nail polish to perfume and more. They’ve created an FAQ experience for their community of “Ipsters” that offers classic categories, important updates, and a “Get Instant Answers” option for live chat.  
  • Boundary is a backpacking outfitter with an FAQ page that addresses technical questions front and center. They also offer live Q&As on their product pages, which means their product experts can publicly respond to technical issues that might not otherwise be covered in the product information 
  • Natural Force offers whole food nutrition products and two separate FAQ pages— one for the products themselves and one for how to buy, exchange, and return them. They also have a self-service support desk
  • Paleo Treats packs delectable paleo desserts into a monthly subscription. Their FAQ page covers everything from the paleo diet itself to their company, shipping, sponsorship, wholesale, and samples. And it’s all written in an upbeat, helpful tone 
  • Thrive is a members-only market for sustainably-sourced organic goods. Their FAQ page is massive and breaks information down by membership and accounts, placing an order, promotions, products, shipping & delivery and more 

Taking Advantage of Customer Reviews

Since 78% of buyers who read reviews were satisfied with their final purchases, encouraging customers to provide product and service reviews can be a winning way to cut down on returns. Customer reviews also bring product issues or areas of misunderstanding quickly to the surface, so you can adjust your listings, marketing claims or other factors to get back on track. 

Upping the Customer Service Game 

Customers should have easy touchpoints to reach out with post-purchase questions or concerns. This gets ahead of any frustrations that can arise when they can’t understand how a product works or mistakenly assume it’s broken. In addition to email, phone, or an in-depth FAQ page like the ones mentioned above, a live chat or instant messaging platform can help ensure issues are sorted as soon as possible, long before a return attempt is made. 

Analyzing Customer Data

On one hand, returns can be a costly lesson. But, they’re also a valuable window into the overall customer experience. Returns can provide e-commerce retailers with a detailed aggregation of metrics around their customers, products, and processes. In fact, 90% of global executives who use data analytics reported an improvement in their ability to deliver a great customer experience. 

Make the Return Central to the Experience

We’ve all had one of those memorable moments when, say, Sharon sat on the other end of the line and made it simple, fast, and free to send back a pair of impulse-purchased Where’s Waldo leggings (or was that just me?). Because sometimes the world is not perfect and you absolutely need to make a return. 

Luckily, transforming returns into a positive experience is possible with clear and consistent communication. Transparent shipment tracking, updates about when to expect a refund or exchange item, and easy access to friendly, reliable customer service can all help e-commerce companies retain loyal customers and keep them from clicking elsewhere. 

In terms of our original question at the start of this article around what the average rate of purchase returns should be in a perfect world, there’s not a one-size-fits-all answer. The best way to look at it is as a balance—between permitting enough leeway to instill confidence and a sense of customer comfort in making a purchase, with a policy that screens appropriately for fraud and monitors for profit loss. 

 Shippo streamlines returns for countless e-commerce companies with scan-based return labels that can be included inside the box—and you’ll only be charged if it gets used. It’s a great way to simplify processes and drive increased customer satisfaction.

LeeMarie Kennedy

LeeMarie is a multi-niche copywriter, editor and content marketing creator in Boston, Massachusetts. When she’s not meticulously wordsmithing or brainstorming a trending topic, she can be found teaching yoga, wandering the world, drinking fair trade coffee or eating too much cheese.

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